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Guardian: 95% Mortgages "not a source of risk"
HAMISH_MCTAVISH
Posts: 28,592 Forumite
http://www.guardian.co.uk/housing-network/editors-blog/2013/mar/08/lack-of-supply-british-housing-crisisThey have been the norm for the last 30 years, when more than half of first-time buyers had deposits of less than 10%. That in itself was not a source of risk.
According to Wilcox there is no reason why banks and other lenders should not be supporting mortgages at 95%.
This issue is getting more and more media attention.
Pressure is building on the BOE and politicians to get this problem fixed.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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i certainly agree with her first point, that local authorities should be able to borrow more to build houses.
95% for buyers, well, not so much.
1. i could just about accept it if lending multiples went back down to historical norms, but unlimited 95% LTV combined with current 4 * joint salary multiples [which are entirely without historical precedent pre-bubble] would just see total household debt balloon to absurd levels again, and hamper the BoE's ability to ever get inflation under control.
2. government forcing banks to take bigger risks that it wants to is, well, basically madness lies that way. it can't be done without the state basically saying that it's prepared to prop up the banks.
lastly i very strongly disagree that anything other than a minuscule, minority lobby would agree that "Pressure is building on the BOE and politicians to get this problem fixed"FACT.0 -
the_flying_pig wrote: »i could just about accept it if lending multiples went back down to historical norms, but unlimited 95% LTV combined with current 4 * joint salary multiples
Average income multiples of actual buyers never crossed 3.5 times even at peak.
4* joint is, and always was, vanishingly rare.
And to be honest, I actually wouldn't care if 95% mortgages were LTI limited to say 3.5 times main plus 1 times second applicant, if it then meant they could become much more widely available. Those LTI limits could then be extended as the LTV decreased.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Average income multiples of actual buyers never crossed 3.5 times even at peak.
4* joint is, and always was, vanishingly rare.
behave.
the maximum available multiple is far higher than it ever has been.
the effect of this is that the average multiple is far higher than it ever has been.
obviously the average multiple is nowhere near as high as the maximum available multiple, why would it be?FACT.0 -
the really, really, risible thing in the article is the statement that,
"The inability of those without capital to access the housing market is causing the cost of housing – rents, and property prices".
the author clearly doesn't have even a shred of common sense.
this takes you back to the very, very first lesson in a GCSE economics lesson.
price is about supply and demand.
more demand means higher prices.
less demand means lower prices.
it's as simple as that.
she's focusing on second order effects.
if someone stuffs himself with cream cakes all day every day, he is extremely likely to put weight on.
the first order effect is that more calories = more weight.
there's a second order effect whereby it's possible to gorge oneself so much that one might sometimes throw up, putting a little bit of downward pressure on bodyweight.
but the first order effect is always the most important thing.FACT.0 -
the_flying_pig wrote: »obviously the average multiple is nowhere near as high as the maximum available multiple, why would it be?
I rather suspect you'll find the distribution of income multiples is fairly tightly grouped in a bell curve around the average.
The vast majority of new mortgages will be within spitting distance of the average. A small and relatively insignificant minority will form the outer edge of the bell.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
the_flying_pig wrote: »the really, really, risible thing in the article is the statement that,
"The inability of those without capital to access the housing market is causing the cost of housing – rents, and property prices".
the author clearly doesn't have even a shred of common sense..
And the really, really risible thing in most of your posts is your inability to grasp complex issues, instead reverting to notions of "common sense" Which is rarely either.
Those conclusions are not those of the journalist, but rather those of Professor Steve Wilcox, writing in the The UK Housing Review, published by the Joseph Rowntree Foundation.
Who I would bet is significantly more informed on UK housing issues than anyone posting here.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Average income multiples of actual buyers never crossed 3.5 times even at peak.
That's because people lied about their income.
But then you know that.
Don't you?0 -
That's because people lied about their income.
But then you know that.
Don't you?
If that was the reason, then when banks stopped self cert lending average income multiples would have risen.
They didn't.
They fell instead.....
But then you know that.
Don't you?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
I didn't even mention self-cert.0
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“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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